NEC Director Hassett on the Intel Deal: More Are Coming 8/25/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Intel, Intel, Intel. It's official. The U.S. owns 10 % of Intel after the chipmaker's CEO went to Washington for an Oval Office chat. You want to trade your job for 10 % of equity? Go with God. Our Andrew Ross Sorkin is joined today by Leslie Picker and Wilfred Frost. I'm sorry, America's not as much of a free market as it used to be. White House economic advisor Kevin Hassett tells us more deals may come. I'm sure that at some point there'll be more transactions, if not in this industry and other industries.

0:42And the U.S. Open is underway in New York City. Venture capitalist and sports entrepreneur Mark Ein joins us on set to discuss the big changes on Center Court. It always had this image of sort of an older, not very diverse audience. and that's totally changing. And then the sport itself, these athletes are like global superstars. Plus, Fed Chair Jay Powell opens the door to an interest rate cut in his Jackson Hole speech. The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance. Is this a pivot? It kind of felt weak. To me, it felt weak for taking a stand.

1:22He's just caved. It's Monday, August 25th. Squawk Pod begins right now. Stand Andrew by. Three, two, one. Up and Andrew. Good morning. Welcome to Squawk Box right here on CNBC. We're live at the NASDAQ market site in Times Square. And I've got two very special people I'm hanging out with this morning. I'm Andrew Ross Sorkin along with Leslie Picker and Wilfred Frost in from London. Very nice to see you both. Treat to be here. It is a treat to have you all week. Joe and Becky are off on this final week of August. but we are not off. There's a lot going on. By the way, Leslie, I don't know if you heard him intro this.

2:00Do you think Andrew's aware he's stuck with us all week? Yeah, yeah. No, he just referenced it this morning. No, no, all week, all week. We're doing this all week. It's not like we'll see how you do on Monday and then we'll see if you come back. I mean, we flew in from London, so he's locked in for sure. He's locked in. He's locked in. Leslie can bail at any time. My two alarm clocks worked this morning. Yeah. I woke up before them because that's long British time. I'm taken back to the Wex days where you could have a weekend back at home in London, fly back in and just slot back into the time zone.

2:31Anyway, breakfast is my new gig anyway. I know. It's a breakfast. But for two or three mornings, I think you're going to feel fine. And then it'll slowly. Yeah, but I've been doing these shifts before. Yeah, but you were a younger man before. No, no, but I've been doing it since February in the UK. Oh, right, right, right. It's just, you know, we talk about different stuff. Well, can we get you a Pete's coffee this morning if you know where I'm going? Oh, I think I do know where you're going, but I'll take any coffee. Okay. At this time, you don't really care about the brand. By the way, we might also talk about a British coffee brand as well, about Costa this morning.

3:07Well, there's a lot of coffee news and a lot of merger news on M &A Monday in August. Keurig Dr. Pepper is buying Dutch coffee company JDE Pete's for more than$18 billion in cash. Keurig says the company, the merch company, plans to separate its coffee and other beverage units as soon as practicable. Practical, I'm assuming. Practicable. Practicable is a word. It is a word, but I've always thought since I started this job, why not go with practical? I know. I was like, maybe I need more coffee. Well, we definitely. The two companies will be listed in the United States and led by Keurig's current CFO and CEO, respectively.

3:46According to a press release from Keurig, the deal is expected to create the world's largest pure play coffee company and result in about$400 million worth of cost synergies over three years. Keurig Dr. Pepper was created in 2018 through the merger of Keurig Green Mountain and Dr. Pepper Snapple. I feel like that was just yesterday. Shares are up roughly 9 % this year. Before this morning's news, J.D.E. Pete's shares were up about 60 % in 2025. This is the whole coffee merger element and what's going on in beverages is so interesting right now, especially as it pertains to the tariff element, the drought.

4:21It's just created all these challenges. Hold on, so I'm an expert on this, but my read on it this morning, tell me if I'm wrong. The soda business sounded actually like a good business, and the coffee business was the struggling business? That's how I read it, too. Okay, I just want to make sure I have not lost my mind. because I originally thought coffee, premium, that's like a great business. Right. It sounded to me like the multiples on the other business. It's interesting to see how the European press versus U.S. press lead the headline on this. The headline here is they're splitting back up again.

4:48Right. Obviously, in Europe, they're buying a big business that owns Kenco and Darry Egberts. It's a decent-sized acquisition taking place as part of it. But I know it was 2018, so it's a long time ago, It's not like you're criticizing the merger in the first place, the tie-up in the first place, like, soon afterwards. But it's basically acknowledgment that that didn't really work for them. Well, and some of the parts of, you know, coffee relative to soft drinks and sodas. Blackberry Dr. Pepper, apparently, is a big winner on the soda side. Did you know that? Do you drink this stuff? No, Dr. Pepper.

5:23I mean, Pete's is an interesting one because it's got, like, one high-end brand and then quite a few more low-end brands, like Kenco and Darry Egberts. But anyway. And JAB was the entity that's involved in kind of both. It was the one that, you know, obviously is a majority owner of, I believe it was Pete's, and then has like a 5 % stake or 4 % stake. Something like that. Yeah. Let's talk you through now what's ahead this trading week. Last week of August, but there's still a lot on. The action will really pick up later on in the week. Friday, we get the big economic reading of the week. July PCE inflation.

6:03It's the Fed's preferred measure, of course. Could play into a big role in helping determine whether central banks will cut rates next month. I have to say, fascinating about that. What happens if we now get a couple of hot inflation reads? Does Powell have to backtrack again? I was seriously surprised that he pivoted last week. After taking a stand, it was not even the right place necessarily. You weren't expecting him. I was not expecting it. It's not the right venue to pivot. Our policy rate is now 100 basis points closer to neutral than it was a year ago. And the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.

6:48Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance. It kind of felt weak. To me, it felt weak for taking a stand. He's just caved. Well, I felt like his whole MO, the last few Jackson holes, has been to preserve optionality. And given the current environment, that's been the MO. But obviously, against the backdrop with political pressure, you know, a lot of uncertainty out there, I was also surprised that he was so clear. What does he do if PCE follows PPI and it's super hot? What does he do then? We'll see.

7:26Well, then he might start to look at jobs and say he can go that direction. I've always had a view. It's somewhat conspiratorial, and he would not like this view. This is the last decision that he's going to make before President Trump selects likely whoever the next Fed chair is going to be. Right. All these interviews are going to happen. Scott Besson's going to do them in September. If he had been, quote unquote, defiant and decided that he wasn't going to lower interest rates, I think the president would be more likely, you can take one with a grain of salt, by the way, I would have thought that the president, in sort of the face of what the president would have seen as defiance, he would have been more likely to appoint an absolutionist, sort of absolutely sort of loyal individual who he knew would be like a full-on dove.

8:17and that by potentially saying, OK, I'm going to lower interest rates now, maybe it gives everybody a little bit of breathing room to find somebody or to pick somebody who might feel hopefully a little more independent. I do not know. You may think that's completely crazy. No, I buy that entirely. But that's a bit weak. Well, that might be weak, too. But I'm just suggesting. Yeah, it's interesting, though, because we heard from a lot of other Fed governors who were out there as well. And, you know, obviously in order to lower interest rates, they like to have as much consensus as possible. The last meeting, you know, was somewhat historic on that front.

8:53But, you know, there was a lot of attention paid to the dual mandate and the idea that inflation, you know, it still has a lot of uncertainty around it. And what happens if, you know, some of these delayed tariff elements kind of filter their way into these readings and and seemed to be a little bit more hawkish, just kind of writ large, except for the ones that we'd already known to be more on the dovish side. So, I mean, I think the markets still say 80 % chance of a cut in September. So they took the pivot for what it was. The market reacted to it. But in terms of just the overall likelihood and the pricing in the bond market.

9:31The thing I just, you have to conclude from all of this is stickier, longer term inflation. You know, not the 10 % we saw a couple of years ago, but the above target for sure. I mean, just as a snapshot as well in the UK, weak cut rates most recently. And then the inflation print a week later came in at 3.8, where it's harder. And people are still expecting another Bank of England cut in the next meeting, or if not the next one, the one after that. So either way, central banks, one way or another, are kind of finding the way to try and cut even despite the inflation. but they're not as focused on it as they used to be.

10:06They felt it was kind of hike as aggressively as possible. So I just thought it was interesting. But let's see, PCE, what day did I say PCE was? Friday. Friday. This is the story of the morning. Intel. Intel, Intel, Intel. We're watching shares particularly closely right now. 25 % are sitting at 25, up about 3%. This follows, of course, the news that Trump, the Trump administration taking a 10 percent stake in the U.S. chipmaker in a post on Truth Social. President Trump saying I negotiated this deal with Liputan, the highly respected chief executive officer of the company. The United States paid nothing for these shares and the shares are now valued at approximately 11 billion dollars.

10:54It's not exactly how it happened, but we'll explain. Trump called the transaction a great deal for America and for Intel. It's going to be funded. He said there was no cash involved. It's going to be funded with about$6 billion in previously awarded grants to Intel under the 2022 CHIPS Act, plus about$3 billion from another formerly classified government program. Joint release from Intel and the White House saying the U.S. will not seek direct representation on Intel's board. It also pledged to vote with the current board on matters requiring shareholder approval with limited exceptions. I would love to know what those exceptions are.

11:32This is one topic we're going to get into a lot this morning with White House NEC Director Kevin Hassett. We've done this before, but typically only in the context of companies that were seriously on the ropes. And at the time, I'm talking about GM. You could look at the banks. You could that kind of thing. this and maybe you could say intel is on the ropes maybe but i don't think this was that circumstance at least in this context and the question i have longer term is whether we're going to see a lot more of this apparently after they did this they attempted to do this to taiwan semiconductor and taiwan semiconductor said we don't want the money we don't need the money if you know so well that's the bigger question this comes back to why you know the stock's obviously up.

12:20It comes at a time for Intel where obviously it's not like it's a richly valued stock like some of its rivals. So that's part and parcel of why it might rise on this. But I think it comes down to what does it imply the administration is going to keep doing in terms of policy going forward? And that might be why, as a side note, TSMC is like, well, the policy is going to benefit the domestic players. I think that's the sort of shorter term, maybe even medium term constructive argument for Intel is, does this suggest everything in all policy coming forward is going to be there to support domestic players like this, and therefore we need to have a bit of that upside?

12:56The longer term, you know, don't need to say this on this channel in this city, but state ownership is, it doesn't usually work out long term. Not the best track record. No. But at the same time... Coming from Europe, I'm well aware of that. From Louboutin's standpoint, I mean, he walked into that meeting... He was about to lose his job. He was about to lose his job. Yes, but so sure, if you want to trade your job for 10 % of equity, go with God, I guess. Right. It was self-preservation technique. But that's the question. What do the shareholders think? But they seem to like it in the short term.

13:28Well, because they know that the alternative, the practical alternative is worse. Because what you would have likely had is the president would have said, you know what? You guys are all screwed up. We don't like your CEO. We think he's involved with the Chinese or whatever he wants to say about it. and he would have somehow, A, tried to find a way to push him out. B, they would have said, you know what, you guys are so screwed up. We can't give you these grants. You clearly can't meet any of the deadlines and any of the other commitments that you made before. So you're not getting this money anymore.

14:00By the way, then you would have had a true sunk cost problem because Intel has invested heavily in trying to make this work but actually needs the money on the other end to make it work. So, by the way, as a taxpayer, you know, on a very short-term basis, sure. If we can get the benefit of this, great. However, the long-term effects, as you rightly said, to me are so troubling that I'm surprised people are not putting their hair on fire about this. Well, I think one of the reasons why the stock has been up is there's this expectation that the administration can coax certain potential customers to do business with Intel.

14:39You're going to have to buy some of these chips. Right. And Tim Cook, you know, despite how many golden-plated trophies he gives Trump, will probably say yes. And it was a nice trophy there. It was a very nice trophy. And gold prices are very expensive. Special glass as well. The only final thing I say is, I'm not sure I should say this, 14 minutes into my weekend. But it is quite an important point, which is Trump and America generally always says, we're the free marketplace. You and Europe have got to take this tax away. and you in some other country have to remove these non-tariff barriers.

15:14How are we meant to compete? I'm sorry, America's not as much of a free market as it used to be. Under the Biden administration as well, extraordinary state subsidies. It's a different way of doing it. Yeah. You know, how are we, the battery communities in Europe, if you blocked from doing this type and there's huge subsidies for wind farms and then in a different way here. It's very difficult. And I know what the response is. Crimea River, we're able to do it. Fair point, but it's just a different ballgame now. Tees will be next. Coming up next on Squawk Pod, the government's deal for a 10 % stake in Intel.

15:52Kevin Hassett, the director of the National Economic Council. In the past, the federal government has been giving money away, lickety-split to companies, and the taxpayers have received nothing in return. So this arrangement, it may only be the beginning.

16:16Welcome back to Squawk Pod from CNBC. A headline in The New York Times this weekend described America's newest activist investor, President Donald Trump. The president did confirm late Friday afternoon that chipmaker Intel has allowed the U.S. government to take an ownership stake in the company, about 10%. And I said, I think you should pay us 10 % of your company. And they said, yes, that's about$10 billion. I don't get it. This comes to the United States of America. And I said, I think it would be good having the United States as your partner. He agreed. And they've agreed to do it. And I think it's a great deal for them.

16:55And I think it's a great deal. He walked in wanting to keep his job, and he ended up giving us$10 billion for the United States. So we picked up$10 billion. We got into this shift to a more state-sponsored capitalism with Kevin Hassett, the White House advisor who heads the National Economic Council. And he hinted, well, more than hinted, that, yeah, this just might be the new normal. Joining us right now, talk about that and so much more. We're going to talk about Jay Powell and everything else. White House National Economic Council Director Kevin Hassett. Kevin, it is great to see you this morning.

17:31Thanks for coming on. Yeah, it's great to be here. So here's the question. Ronald Reagan famously said the nine most terrifying words in the English language are, I'm from the government and I'm here to help. Right? You remember that line. And it's a line that I think has been used by Republicans for the last several decades until maybe Friday. Can you explain the rationale behind taking this 10 % stake? Right. Well, it's not really a taking, right? The bottom line is that because of the CHIPS Act, the U.S. government had decided to give a whole bunch of money to Intel. And President Trump and Howard Lutnik, Secretary Lutnik, talked to Intel about the progress they were making and the hurdles that they had to hop over in order to get the money.

18:23And I don't think they're particularly happy with that progress. And so in the end, they worked out a deal where Intel is going to get the chips money, but in exchange, we're going to get some equity. And equity is not voting, so there's not going to be government intrusion into the business of Intel. It's more like a down payment on a sovereign wealth fund, which many, many countries have. Kevin, though, is this the beginning of a larger effort by the U.S. government to take equity stakes in other industries that we subsidize or other companies in the AI and chip space that we subsidized. So one of a good example is AMD.

19:00Another example might be Taiwan Semiconductor. Right. Well, I think this is a very, very special circumstance because of the massive amount of chipsack spending that was coming in Tel's way. But the president has made it clear all the way back to the campaign that he thinks that in the end, it would be great if the U.S. could start to build up a sovereign wealth fund. And so I'm sure that at some point there'll be more transactions, if not in this industry and other industries. Okay, so we should expect the U.S. government to be taking more equity stakes in businesses around the country. That is something that if you're a CEO this morning watching us, you should say, okay, the sovereign wealth fund may be coming and trying to effectively buy in some kind of equity stake.

19:43It's possible, yeah, that's absolutely right. In the past, the federal government has been giving money away, lickety-split to companies, and the taxpayers have received nothing in return. And so now what's happening with the Intel deal is the CHIPS Act money is going out as planned, but instead of it just going out and disappearing into the ether, the U.S. taxpayers are getting a little bit of equity. I can really not see how anyone would think that's a bad thing, unless you thought that the government was then going to go in and run the company. But these are going to be shares that don't have voting rights.

20:15The government's going to stay out of it. Well, it goes back a little bit to the Ronald Reagan quote that I started with, which is when for many, many years, you know, you and I used to have conversations about Solyndra and how I think you thought that that was a terrible, terrible mistake for the U.S. government to be getting involved. And we have been exporting the idea of a free market around the world for as long as I can remember. And this is a major shift. Do you not agree? No, I think this is a very special case of Biden committed the money. You know, President Trump and Howard Lutnick weren't very clear that they wanted to continue to let the money go out because the paths weren't being crossed, the hurdles weren't being crossed.

20:55And so I think it's a very special case. But again, the general principle that if the U.S. government is able to create a situation that benefits everybody, that it should benefit the taxpayers too. But if you're saying that this is really just the beginning of more as it relates to a sovereign wealth fund or something else, it would be suggestive of something very different. And I wonder how we in the United States and maybe even around the world should think about the idea of national champions, which is something that we've been and the Republican Party in particular has been quite critical of for years.

21:26No, I mean, we're absolutely not in the in the business of picking winners and losers. But this is not a thing that is unprecedented. If you look at it right now, the U.S. government owns most everything of Fannie and Freddie. And the president, led by Bill Pulte and Howard Lutnick and Scott Bessett, are studying what should we do with that equity in Fannie and Freddie right now. They've been bringing in Wall Street leaders to discuss it as well. And so it's not unprecedented for us to have a little bit of equity in something. And, again, what President Trump wants to do at all points in time is maximize the value of taxpayer dollars.

21:59Well, let me ask you this then. In terms of improving the future of Intel, one of the things that it needs more than anything else is demand. Demand for its chips, which it does not have at the moment. And so there's two ways to get there. One is just make better chips, which they need to do. But the other is they're going to have to find customers. And the question is whether you believe that this administration is going to use its influence with other companies that would otherwise be the buyers of these chips to buy said chips. We had a period of time, remember, where Gina Raimondo in the Biden administration was trying to persuade Amazon and so many other companies to buy these chips unsuccessfully at the time, but criticized, if I remember, by Republicans for doing such a thing.

22:45So do you believe that someone from the administration is going to call up any of the tech companies and say, you know, you're building a data center? We'd love for you to use Intel chips. No, I don't expect that's what's going to happen. But I think what is going to happen is with the cash flow that they've gotten, in addition to some money from outside private funders, Intel's got to get its act together and once again become the leader in chip space. Can I ask one related question? Because I wonder if you think there's a historical sort of rewrite of history. Some people have suggested that the Biden administration should have taken equity the first time around when the CHIPS Act was first put in place.

23:23And the reason I'm curious about that is because I think at the time it was clearly to incentivize chip companies to come to the United States, do business, build fabs. And the fabs at the time were considered uneconomical, meaning companies didn't want to do this unless they could be subsidized. Now, maybe you could argue that given the tariff regime that's been put in place, it's changed the economics of what the playing field looks like today. But at the time, I think it would have been very difficult to go to these companies and say, I'm going to give you cash, you're going to give me equity, because I think they would have said to you, then please don't give me the cash.

23:59Am I wrong? Well, again, if you're a company that's losing money, the equity doesn't have much, if any, value. And the bottom line is that President Trump is building an America First agenda that includes, as you say, tariffs, which will make it so that people are much more incented to bring their production onshore. And so 100%, we expect that companies like Intel that are on-shoring production are going to become increasingly profitable because of the president's trade policy. Kevin, it's Wilfair. I wanted to move the conversation on to the Fed. Did you welcome the tone of the chair's speech on Friday, the pivot, I guess, that started to appear?

24:40Right. Yeah, I think that the pivot was accurate. It was data-driven. You know, if you look at the trailing six-month inflation rate, it's 1.9 percent. Core is about half a percent higher than that. And so inflation has gone way down. Meanwhile, the economy is looking strong, but not too strong. And so I think it's appropriate for the Fed to consider now doing what federal funds futures markets are saying they're going to do, and that's cutting rates. And so I think that the Fed's a little bit late to the game, but I thought that the presentation that Jay Powell made up at Jackson Hole was sound.